Space tourism company Virgin Galactic (NYSE:SPCE) took to the skies this past weekend, literally, as the company successfully completed its first spaceflight in more than two years. Wall Street is celebrating the news, pushing SPCE stock up 15% on the day, following a big 30% rally last week heading into the flight.
Specifically, Virgin Galactic’s SpaceShipTwo aircraft, VSS Unity, was carried up to an altitude of about 44,000 feet by its mothership, the VMS Eve. The VMS Eve then released the VSS Unity, which proceeded to fire its rocket engine for more than 60 seconds, accelerated to more than three times the speed of sound, and shot into space.
While in space, VSS Unity did a backflip in microgravity at the edge of space, before gliding back into atmosphere and safely landing at Spaceport America in New Mexico. It was a complete, smooth test flight of what will eventually be Virgin Galactic’s commercial space tourism operations. As Virgin Galactic CEO Michael Colglazier told CNBC: “It was flawless”.
Investors are cheering the news. SPCE stock is soaring.
And they should be — this is big news. Very big news. Big enough news that I think it sets the stage for SPCE stock to soar back to $50 over the next few months.
Perfecting the Technology
For a while, it looked like Virgin Galactic was stuck in this “delay, delay, delay” mode that the company has developed an infamous reputation for over the past decade.
After all, this test spaceflight was supposed to happen in December. But delay after delay kept pushing the test flight back, and each delay caused SPCE stock to take a leg lower.
Now, we can forget all that. The flawlessness of this weekend’s flight shows that these delays were worth it.
Flying people to space to actually rocket science. There are few things in this world more scientifically challenging that what Virgin Galactic is working on right now. And the stakes are high. If Virgin Galactic messes up the science, people will die. They have to get it right, and they have to be perfect.
That’s why Virgin Galactic delayed this test flight so many times. There were some electromagnetic issues, then some hardware issues. Virgin Galactic had to address those, and perfect the underlying technology, before the company felt comfortable flying pilots into space.
Virgin hit that point this weekend. And, not surprisingly, the test flight went off without a hiccup. It was perfect — and evidence that Virgin Galactic has, indeed, perfected its technology.
If that is the case, then the sky is limit for SPCE stock over the next few years.
Big Catalysts on the Horizon
With the technology perfected, SPCE stock has some enormous catalysts on the horizon.
Here’s what Virgin Galactic’s timeline will look like over the next few months.
First, the company will do another test flight, and fly four passengers in the VSS Unity’s cabin in a suborbital flight. After that, Richard Branson will fly in the VSS Unity into space. Then, the company will re-open reservations for customers, and begin commercial spaceflight operations in 2022.
In other words, Virgin Galactic may have been crawling and ostensibly going nowhere over the past few months. But, over the next few months, this company is about to jump into warp speed.
As it does, SPCE stock will fly higher.
Huge Long-Term Upside Potential
We believe the commercial space tourism market will be massive, since there are a lot of very wealthy folks around the world who would pay just about anything for a new experience like seeing Earth from space.
We also believe that the business model here is very attractive, since the technology to be able to offer commercial space flight operations is so complex that very few companies will be able to do it — and therefore, you’ll have a market with robust demand and limited supply, leading to great margins for suppliers.
And, lastly, we believe that Virgin Galactic is the leader in this space.
Because of these assumptions, we firmly believe that, by 2030, Virgin Galactic will operating multiple spaceports, flying dozens of people to space every month, and generating billions of dollars in revenue and hundreds of millions of dollars in profits.
On those assumptions, we think the long-term earning growth potential here warrants an SPCE stock price today of around $50.
Bottom Line on SPCE Stock
Virgin Galactic represents a compelling play on the burgeoning Space Economy — which, in it of itself, may be one of the best investment megatrends of the 2020s.
Investing early in space stocks today, could be like investing early in internet stocks back in the 1990s. That is, space stocks today are on the precipice of enormous growth over the next 10 to 20 years.
There’s an entire economy brewing in space travel, from space tourism to space stations with artificial gravity, and so much more…
SPCE stock is one such explosive stock. But it’s far from the only one making noise in the space economy. Indeed, there actually about a half dozen other space stocks out there, some of which are even better investment opportunities than Virgin Galactic.
If you’re ready to get ahead of the herd and invest in the next generation of space travel, start by clicking here to subscribe to Innovation Investor.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this video.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.